NOTE: This post (and the article it references) is from 2013 – but it still has good information about the differences – though the prices may no longer be accurate.
Mark Brinker just wrote one of the best articles I have seen regarding the differences between WordPress.com and Self-Hosted WordPress.
I really wish they would change the name of one of them instead of calling them both WordPress! Calling them the same thing is so confusing to new bloggers! And that is part of the reason this great article has been so badly needed.
As much as I tear my hair out sometimes at operating a self-hosted site, reading this article makes me happy with my choice. I had not fully understood all the limits that WordPress.com puts on users. Nor had I understood that you can lift those limits – each for a yearly price. Suddenly the amount of work I have put into this site (and still need to put in) doesn’t seem quite so bad.
Mark’s article can be found here: 7 Little-Known Reasons WordPress.com Sucks for Serious Bloggers on BoostBlogTraffic.com.
By the way, the Headline Hacks book that is offered for free on BoostBlogTraffic is quite good. It subscribes you to the BoostBlogTraffic blog but they do not overdo the emails at all. Plus you can always unsubscribe if you do not want to receive their videos.